The Pros And Cons Of Moving From Online To Offline
E-tailers like pioneer Warby Parker have merged the digital and the physical with great success, but there are significant challenges that come with opening brick-and-mortar stores. Here’s why the benefits outweigh them.
With e-tailers like Warby Parker, Rent The Runway, and more finding major brick-and-mortar success, the question is no longer “why move from online to offline?” but “why not?”
Well, the hurdles that a small online-only business must leap in order to establish, manage, and make the most of a physical retail presence can seem insurmountable, for one — and it’s also quite likely that many e-tailers are still unaware of the symbiotic relationship between online and offline.
But in a world where the digital and the physical are irreversibly blended, the benefits of going from “clicks to bricks” can far outweigh the risks — for retailers that have a plan.
Moving from online to offline retail is a big step, and driving foot traffic to a physical store requires a different approach than online sales; promoting a store requires a location element, and simply sending a “sale” email or message to all customers regardless of contextual location won’t suffice.
E-tailers with an established following have a leg up on attracting attention when they open a brick-and-mortar location, but as Shopify wrote in a blog post dedicated to the topic, “the old saying ‘if you build it, they will come,’ has proven itself outdated and far from the truth when it comes to surviving in today’s retail environment.”
In order for a physical store to succeed, most retailers find that they need to manage its location information across digital properties so that it is easily discoverable — as well as to target shoppers with information about openings, sales, and events across devices based on their location. This is a distinctly different marketing approach than what is required to promote an online-only property without physical location info, but the pay off can be well worth it.
Secondly, there is the issue of cost. Of course, renting or buying a space to set up a permanent retail location requires significant expense. But for a business that has found success online and has investment capital, doubling down on a commitment to brick-and-mortar has great upside potential.
With over 90 percent of purchases still taking place in brick-and-mortar stores, physical retail is an important touch point for consumers who expect to interact with brands in the most convenient way for them at any given moment, whether that means on mobile, on desktop, or in their closest local store.
“In order to be a successful retailer these days, you need to have a strong omni-presence,” said Jocelyn Gailliot, Tuckernuck co-founder, earlier this year, following the brand’s online to offline expansion. “This includes selling online, selling offline, and having a brand that is popular on social media.”
Additionally, as detailed in a recent report from L2, physical sales don’t just come with their own financial benefits; they actually boost a business’ online profits as well, marking them as an even better investment. As one example from the study, Rent The Runway’s organic search traffic surged after the opening of its four flagship locations, with uniques increasing by over 100k in less than a year.
A major reason for this type of spike is the increased ease of discovery created by physical retail locations; essentially, as consumers are more often exposed to a brand in the real world, even if just while walking by on the street, they are more likely to search for it online at their convenience.
As L2’s Elisabeth Rosen posited in a recap of the company’s the Intelligence Report: Death of Pureplay Retail, “physical stores are far from extinction. In fact, they confer so many advantages — from increased site traffic to financial returns — that e-tailers without brick-and-mortar stores might be the ones in danger.”
Finally, as consumer expectations shift in light of the rise of one-day and same-day shipping offered by the likes of Amazon — and, potentially, Postmates — e-tailers can actually gain a delivery advantage from having more physical outposts from which they can either distribute items or offer in-store pickup.
“In an era where ‘software is eating everything,’ the multi-trillion dollar question is, how do retailers transform brick-and-mortar locations from a major liability to a strategic advantage?” said Greg Bettinelli, an Upfront VC partner, in a recent blog post. “It seems obvious that the answer revolves around utilizing these locations, at least in part, as distribution centers so that they ‘out Amazon, Amazon.’”